Low level of Covid vaccination and political instability, risks for companies in Mexico: Fitch

Mexico.- The rating agency Fitch Rating warned that the low vaccination rate against Covid-19 in Mexico, as well as political risk and the depreciation of the Mexican peso, put companies at exponential risk.

He explained that only about 37% of the citizens that live in the Mexican Republic have received at least one dose of the vaccines to the cut of the past July 31st of this year.

Through a document, Fitch realized that investors operating in the gaming sectors, accommodation, the leisureAs well as some of the energy sector, they have little capacity to be able to face the challenges that the current situation in Mexico poses.

This is due to the fact that the capital structure is weak and, in addition, there is financial pressure.

For its part, at the regional level, the rating agency stated that the low rates of anticovid vaccination, political instability and currency volatility will pose an extra challenge for companies in Latin America.

Likewise, he warned that these factors could turn out to be a risk for economic growth by reflecting a feeling of disapproval of danger, which would lead to capital flight and financing difficulties.

In addition to this, he pointed out that other elements such as dependence on governments and related entities for cash flow, weak credit rates and the linkage of the sovereign rating, could reduce the ability of some companies to face the challenges in this regard. .

In this context, Fitch expects an average growth of the Gross Domestic Product (START) for the Latin American region of 5% in the current year, after contracting 7.8% in 2020, with an increase that remains above the 2015-2019 average, of 2.1%, but slowing down to 2.9% next year.

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However, he warned that a decline in pandemic levels and an inefficient policy could weaken the economic conditions of Latin America, which would end up deteriorating the credit profiles of the area.

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